Mitogenic stimulation of cells induces rapid and transient activation of MAP kinases. Previously we have identified PAC1 as an immediate early, mitogen-inducible, tyrosine phosphatase in nuclei of T cells. More recently, we have shown that PAC1 is a dual specificity phosphatase that dephosphorylates and inactivates the MAP kinase ERK2 in vitro and in vivo. PAC1 RNA and protein are short-lived, and it appears that controlling the transcription of PAC1 is a major form of its regulation. Thus, the induction of an early response gene, PAC1, results in the feed back attenuation of a primary signalling pathway. PAC 1 is part of a larger family of related MAP kinase phosphatases. In addition to PAC1 which is expressed predominantly in hematopoietic cells, we have cloned and characterized MKP-2, MKP-3, and MKP-4 (which have relatively broad expression patterns) from activated T cells. The specificity of PAC1, MKP-3, and MKP-4 is directed toward the ERK2 and p38 forms of MAP kinase. MKP-2 has activity toward ERK2 and JNK. While PAC1 and MKP-2 are nuclear, MKP-3 and MKP-4 are localized in the cytoplasm. In order to reveal possible unique functions of these phosphatases in the context of development and the immune response, we have developed transgenic mouse lines which constitutively express the phosphatases in T cells starting at a stage of development preceeding antigenic selection. The development of T cells and selection of TCR-transgenic populations in the constitutive presence of the various MAP kinase phosphatases are being investigated. We have used tetracycline-inducible PAC1 expression in 3T3 cells to investigate the role of ERK2 activation in transformation and tumorigenesis. MAP kinase activation is required for morphological transformation of raf and MEK but not ras-transformed cells. This system is being used to investigate the role ERK2 activation in in vivo tumor formation.